2015 first half results - marcus today · 2020. 9. 14. · first half result overview •8.8% ttv...
TRANSCRIPT
2015 FIRST HALF RESULTS PRESENTATION 24 FEBRUARY 2015
PRESENTATION OVERVIEW
1. Introduction - Haydn Long
2. The numbers - Andrew Flannery
3. The business - Graham Turner
4. The strategies - Melanie Waters-Ryan
5. The future - Graham Turner
6. Questions
7. Appendices
INTRODUCTION
• First half result in line with revised guidance
– Underpinned by record global sales and record offshore profits
• Continuing to build for the future
– Significant investment in sales network, product range and people
• Balance sheet strengthened
– Further cash growth and lower debt. Ready to capitalise on opportunities
• Guidance maintained
– No change to FY15 target – aiming for accelerated 2H growth
THE NUMBERS
FIRST HALF RESULT OVERVIEW
• 8.8% TTV growth to $8.1b – has almost doubled in 8 years
• 4.6% revenue growth to $1.1b – soft commission growth but
over-ride and super over-ride earnings maintained
• $141million actual (statutory) PBT – includes $3.4m Top Deck
contribution
• $100.3m actual NPAT
• Underlying PBT and NPAT (excluding Top Deck) 5.9% and
6.8% down on PCP
MARGINS & COSTS
• 13.6% income margin – down on PCP, above longer term average
• Year-on-year movement linked to lower gross margins (front-end
commissions) in Australia and Canada
• 1.7% net margin
• Cost growth – new wage structures, ongoing business investment
• Looking for savings – support staff redeployed to sales roles – and
efficiencies
• Invested 1.15% of TTV in sales & marketing
CASH & CASH FLOW
• General cash up 6.8% to circa $429.4m – almost doubled in 5 years
• Borrowings lowered to $31.9m – expensive India debt ($19m) retired
• Stronger positive net debt position – almost $400m at Dec 31
• $68.1m operating cash outflow during 1H – PCP $124.5m outflow
• Cash flow improvement largely brought about by timing of airline
BSP payments
SHAREHOLDER RETURNS
• Actual EPS of 99.7c (PCP: 110.3c)
• Fully franked 55c per share interim dividend – in line with FY2014
• 55.2% of actual NPAT returned to shareholders
NETWORK GROWTH
• 4% shop/business growth to 2759 – Just below targeted range (5-7%)
• Expansion milestones
300th shop/business opened in USA
250th shop opened in Canada
100th shop opened in Asia/Middle East region
• New hyperstores in Australia (Darwin), USA (LA & Philadelphia), India
(Delhi and Mumbai) and Abu Dhabi
• Hong Kong hyperstore set to open during Q4
YTD RESULTS SUMMARY
$’ million Dec 2014 Dec 2013 %
TTV $8.1b $7.5b 8.8%
Revenue $1,103m $1,054m 4.6%
Income margin 13.6% 14.1% (50bps)
Net margin (underlying) 1.7% 2.0% (30bps)
Underlying*** Profit Before Tax $137.6m $146.3m (5.9%)
Statutory*** Profit Before Tax $141.0m $155.0m (9.0%)
Underlying Net Profit After Tax $97.6m $104.7m (6.8%)
Statutory Net Profit After Tax $100.3m $110.8m (9.5%)
Effective tax rate 28.9% 28.5%
Dividends
Interim Dividend 55.0c 55.0c -
*** Statutory PBT at Dec 2014 included a $3.4m profit contribution from Top Deck (acquired 1H). This has not been included in underlying results for 14/15.
Statutory PBT at Dec 2013 included a one-off $8.7m gain within the Flight Centre Global Product (FCGP) business.
THE BUSINESS
OPERATIONAL HIGHLIGHTS
• Record sales in all 10 countries/regions in local currency
• Record EBIT in UK, South Africa, Singapore and Greater China
• Best 1H result in USA since Liberty and GOGO acquisition
• Combined overseas EBIT up 25% to $25.3m
• Overseas growth partially offsets 10% EBIT decline in Australia
GAINING SCALE OVERSEAS
Overseas 1H TTV Overseas 1H EBIT
2.2b 2.4b 2.5b
3.0b
3.5b
-
0.5b
1.0b
1.5b
2.0b
2.5b
3.0b
3.5b
4.0b
Dec 2010 Dec 2011 Dec 2012 Dec 2013 Dec 2014
12.1m
18.9m
15.4m
20.2m
25.3m
-
5m
10m
15m
20m
25m
30m
Dec 2010 Dec 2011 Dec 2012 Dec 2013 Dec 2014
AUSTRALIA
• Leisure and corporate travel sales up – 5% overall TTV growth
• Corporate TTV topped $1.1b and profits in line with PCP
• Record amount of new corporate business won – improved strike
rate in winning national and multi national accounts
• Unique products launched and proving popular – SmartFLY
• Opportunity to fast-track corporate growth
AUSTRALIA
• Bottom-line leisure results lower than initially expected and impacted by:
– Lower gross margins (consultants lowering commissions to convert sales)
– Costs and investments (wages, shop fit-out and projects)
– Subdued sales growth following FY14 downturn (lower productivity)
• Improvement opportunities
– Vertical integration/product development opportunities to boost margins
– Cost savings to offset front-end wage increases
– Market-share growth through better and more targeted marketing
STAR PERFORMERS
• Bikes
– Pedal Group JV generated $29.3m in sales, up 24.5%
– Almost $1.7million in EBIT (up 12%)
• Travel Money
– $2.6million in 1H EBIT, now one of FLT’s fastest growing businesses
– Expanding network of standalone & implanted shops (subsidising rent)
– Presence in Australia & NZ, set to open in USA & India (FY16)
• Flight Centre Business Travel
– Mixes business (small corporate accounts) with leisure
– EBIT up 15% and circa $130m in turnover in Australia alone
–
• Stage & Screen and Campus Travel
– 20%+ EBIT growth from corporate niche brands
STAR PERFORMERS
UK
• FLT's largest profit contributor after Australia.
• 1H EBIT of $19.8m – 23.5% CAGR over past 5 years
• $320k EBIT contribution from Ireland acquisition (Travelplan)
• TTV up 17% in local currency and could top GBP1b during FY15
• Focus on becoming a “Travel Experience Company” – new
Journeys and Escapes products launched
• GBP1m in Journeys sales in 1st month
USA
• TTV exceeded $AUD1billion (FLT’s 2nd largest region by sales)
• Significant reduction in 1H losses and profitable by Jan 31, 2015
• Strong 2H profits expected – seasonally stronger period for Liberty &
GOGO
• On track to surpass full year target of $USD17m-$USD18m EBIT
(circa 50% growth)
• Record corporate profits, sales likely to top $AUD1b during FY15
• Corporate to open in Austin and Raleigh during 2H (20-city presence)
USA
• Expanding Liberty’s footprint ahead of peak 2H booking period
• New LA & Philadelphia (pictured below) hyperstores
• Pennsylvania & New Jersey megastores
• EuroGuru program helping to grow sales in 12m passenger-per-year
European travel sector & poised for expansion
REST OF THE WORLD SEGMENT
• Strong performance in Singapore, Greater China and South Africa
– Record sales and profits. Singapore TTV up 47% in local currency
• Solid sales growth in NZ but lower profits
– Investing in people (new wage structure) and network (shop refurbs)
• Steady growth in India and Dubai
– Profits down on PCP but sales increasing and bright 2H prospects
• Canada – a W.I.P but some positive signs
– Strong sales growth (TTV up 13% in local currency)
– Expansion into 4 new provinces during past 18 months
– Shifting leisure travel focus – mirroring UK and USA strategies
RESULTS BY COUNTRY
AUSTRALIA
TTV: $4.6b, up 5% in
AUD
EBIT: $110.9m
BUSINESSES: 1465
NEW ZEALAND
TTV: $420m, up 12% in
AUD (up 8% in lc)
EBIT: $3.1m
BUSINESSES: 179
SOUTH AFRICA
TTV: $220m, up 2% in
AUD (up 8% in lc)
EBIT: $4.5m
BUSINESSES: 171
CANADA
TTV: $553m, up 9% in
AUD (up 13% in lc)
EBIT: ($2.7m)
BUSINESSES: 253
USA
TTV: $1.0b, up 13% in
AUD (up 9% in lc)
EBIT: ($2.8m)
BUSINESSES: 303
GREATER CHINA
TTV: $109m, up 19% in
AUD (up 15% in lc)
EBIT: $0.9m
BUSINESSES: 36
INDIA
TTV: $180m, up 11% in
AUD (up 6% in lc)
EBIT: $1.1m
BUSINESSES: 41
SINGAPORE
TTV: $75m, up 51% in
AUD (up 47% in lc)
EBIT: $1.1m
BUSINESSES: 21
DUBAI
TTV: $35m, up 11% in
AUD (up 7% in lc)
EBIT: $0.8m
BUSINESSES: 10
UNITED KINGDOM
TTV: $856m, up 23% in
AUD (up 17% in lc)
EBIT: $19.8m
BUSINESSES: 277
THE STRATEGIES
Our Killer Theme
Brand and
specialisation:
Unique Product:
Experts, not Agents:
Redefining the Shop:
Blended Access:
Information is
Power:
A Sales and
Marketing Machine:
Evolving our brands
to truly specialise in
specific areas of
travel and have
clear customer value
propositions (CVPs)
Making, combining
and sourcing
exclusive FLT
products and
services, rather than
simply just selling
suppliers’ products.
“Our product – not
just someone else’s”
Ensuring each brand’s
people are experts in
understanding the
brand’s
speciality and that
they in turn are
backed by “travel
gurus”, who are
readily
available if additional
expertise is required
Ensuring corporate,
wholesale and retail
spaces reflect that
FLT’s people are
retailers first and
foremost, not office
workers
Ensuring FLT’s brands
are always available
to customers. They
can touch, browse
and buy FLT’s
products when and
how they want –
online, offline, shop,
email, chat, phone or
SMS
Profiles
Patterns
Predictions
More
Agile
Personalised
Relevant
TRAVEL AGENT TO TRAVEL RETAILER
TRAVEL
PROVIDERS
THE
CUSTOMER
What do we have that’s special?
What do we know that’s special?
What do we do that’s special?
What do we have that’s special?
What do we know that’s special?
What do we do that’s special?
1) BRAND & SPECIALISATION
1) BRAND & SPECIALISATION
The CVP is not a set of marketing statements
It is a clear statement of what a brand business has and does that the customer values
2) OUR OWN PRODUCT
We have great products from our partners BUT …
We need to start manufacturing and promoting our own products
(Hard and Soft)
UNIQUE PRODUCT – JOURNEYS
UNIQUE PRODUCT – SmartSTAY
Three value added inclusionsValid year roundOn our flexible corporate rates
At no extra cost!
The smarter way to book your accommodation.features
benefitsIncreased savingsGreater productivityEnhanced travel experience
Download the SmartSTAY Directory Phone App NOW!
Download the App Now!
3) EXPERTS NOT AGENTS
AIR
EXPERTS
HOLIDAY EXPERTS
VACATION EXPERTS
CRUISE
EXPERTS
SME
EXPERTS
Our sales people need to be experts in their brand’s specialised products
SHOWCASING AIRFARE EXPERTISE – LONDON
4) OUR SHOPS NEED TO BE A SHOP
• A place we display our wares
• A place where customers can touch and browse our
products
• A place where no long counter creates a barrier
between the customers and our sales experts
• A place that needs to have zones to reflect the different
product ranges we have
• A place where different customer interactions happen
NEW SHOP DESIGN – FC CHERMSIDE
NEW SHOP DESIGN – ET Ballina
5) BLENDED ACCESS
Our business is always open
when and how you want
OUR LEISURE BRANDS
Shops & Websites
Need to enable our leisure customers to access their brand around the clock
NEW SINGAPORE WEBSITE
6) INFORMATION IS POWER
PROFILES
PATTERNS
PREDICTIONS
TARGETED DIRECT MAIL
7) BECOMING A WORLD CLASS SALES & MARKETING MACHINE
• Generate more volume in enquiry and leads
• Acquisition and retention
• Targeted and personalised
• Better marketing in the on and offline world
BASIC ENQUIRY TO RICH CONTENT
NEW LOOK PRESS ADS
THE FUTURE
2014/15 GUIDANCE
• Targeting $360m-$390m underlying PBT (excluding any significant
unforseen items that may occur)
• Guidance also excludes Top Deck profits
• Top of the range represents 4% growth on FY14 record underlying
PBT – bottom of the range represents a 4% decline
• Expecting strong contributions from overseas, particularly UK & USA
MARKET CONDITIONS
• Some ongoing volatility in Australia
• Impossible to predict timeframe for recovery, but some positive signs
– Good customer enquiry in key leisure brands
– Solid Travel Expo results
– Record account wins in corporate travel
– Market-share growth in some areas – NYC pricing model
– Airfare discounting on key international routes
• Starting to track against weaker trading period – opportunity to grow
sales and profits more rapidly
• Healthy capacity and competition, leading to cheap fares
OPPORTUNITIES
• Continued growth in overseas profits during seasonally stronger 2H
• Fast-track corporate growth in Australia
• Enhanced leisure travel productivity
• Flight Centre’s Widest Choice of Airfares – if it flies, we’ve got it!
• Ongoing focus on Killer Theme and mini themes
• Cheap fares to stimulate demand – Golden Era For Travel
GROWING THE NETWORK
• Focus on organic growth
• Exporting brands within the FLT network – Campus Travel, Travel
Money, Stage & Screen
• New geographies likely – Netherlands and Dublin leisure
businesses planned as an extension of UK business
• Some strategic acquisitions possible to fill gaps in the network
QUESTIONS?
APPENDICES
STATUTORY v UNDERLYING PBT
$’ million Dec 2014 Dec 2013 %
Statutory Profit Before Tax $141.0m $155.0m (9.0%)
Top Deck contribution ($3.4m) - -
One-off gain within FCGP business - ($8.7m) -
Underlying Profit Before Tax $137.6m $146.3m (5.9%)
• $3.4m profit contribution from Top Deck (acquired 1H).
• One-off $8.7m gain within the Flight Centre Global Product (FCGP)
business
FIVE-YEAR GROWTH TRAJECTORY
TTV $8,138m $7,480m $6,593m $6,181m $5,668m
Income margin 13.6% 14.1% 13.9% 13.9% 14.0%
EBITDA $164.0m $179.3m $148.9m $137.5m $121.3 m
PBT $141.0m $155.0m $129.5m $119.7m $101.1m
NPAT $100.3m $110.8m $91.8m $81.6m $70.5m
EPS 99.7c 110.3c 91.7c 81.6c 70.6c
DPS 55.0c 55.0c 46.0c 41.0c 36.0c
ROE 8.8% 10.3% 10.4% 10.5% 9.9%
Cap-ex $39.5m $28.2m $28.4m $27.4m $24.2m
Selling staff 13,853 13,096 12,317 11,866 10,973
General cash $429.4m $401.9m $319.5m $316.9m $249.9m
Client cash $611.3m $594.4m $453.9m $429.8m $406.2m
Cash and cash equivalents $1,040.7m $996.3m $773.4m $746.7m $656.1m
Investments $62.0m $32.2m $55.1m $53.7m $74.8m
Cash and investments $1,102.7m $1028.5m $828.5m $800.4m $730.9m
Dec 14 Dec 13 Dec 12 Dec 11 Dec 10
CORPORATE SOCIAL RESPONSIBILITY
Job creation: About 1200 new jobs created during 2013/14
Employee earnings: FLT paid about $1billion in salaries and wages
Health and financial well-being: On average, one health/financial consult conducted
on every staff member
Gender diversity: Almost half of FLTs leaders are women
Workplace flexibility: 18% of Australian workforce now works from home or under
casual/part-time arrangements
CORPORATE SOCIAL RESPONSIBILITY
Noble Selling Purpose: Initiated during 2013/14 and rolled out globally in July 2014
Community assistance: Flight Centre Foundation donated more than $1m in Australia
alone
Staff contribution: Volunteer leave program introduced - 1300 hours volunteered
Supply chain: 2013/14 TTV = more than $300m in sales for suppliers every week
Shareholder returns: $20,000 investment at float = $1m holding at July 31, 2014.
Additional $240,000 in dividends returned per share